RATING

What Matters To Measure

The Impact of WOSP360 Sustainability Rating

The WOSP360 SDG & ESG Impact Rating
protocol look to measure a company’s exposure to risks relating to environmental, social, economic, technology and governance issues as well as gauge how well a company is managing those operational challenges and risks. SDG (Sustainable Development Goals) and ESG (Environment, Safety, Governance) rating firms usually perform a qualitative analysis of a company’s exposure to ESG and SDG risks, based on publicly available data. Companies are then given quantitative ratings that are intended to stand for both a company’s SDG and ESG risk exposure and how well it is managing those risks compared to peer companies. While there are over one hundred ESG rating firms but a handful of SDG rating firms. While most of today’s “value-based” ratings have focused on a company’s ESG risk exposure to equity holders, credit rating firms are increasingly incorporating ESG ratings into a company’s financial abilities and credit rating.

What Is Driving the Demand for today’s Ratings?

Asset managers have been under increasing pressure from their clients to incorporate ESG issues into their investment activities. Mandates from institutional clients have resulted in most asset managers signing on to the Principles for Responsible Investment (“PRI”) – a commitment to incorporate ESG factors into both their investment and stewardship activities. Besides, millennials have increased pressure on asset managers to consider their climate impacts with SDG and ESG issues and align their social values with investing.

Asset managers themselves are also now being rated on ESG, adding to ESG research demand while SDG seems partly forgotten or misunderstood. For example, Morningstar provides ratings for mutual funds that seek to measure how well each portfolio is being managed for ESG risk. The PRI also issues publicly available assessment scores to all asset manager signatories about how well they incorporate ESG issues into their investment practices

The WOSP360 Methodology

Flow Chart

How Are Investors Utilizing SDG and ESG Ratings?

Both active and passive asset managers are utilising ESG ratings in their investing and stewardship activities. Asset managers are beginning to launch more and more ESG-themed investment products. More ESG-themed index products were launched in 2018 than non-ESG themed index products. These ESG-themed investment products generally exclude and/or weight stocks largely based on third party ESG ratings. Consequently, ESG ratings are directly impacting the investible universe of these ESG-themed products.

ESG ratings are also incorporated into fundamental equity analysis to help investors assess a company’s long-term financial risk and, to some extent, identify opportunities to create alpha.

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Is There a Standard ESG Disclosure Framework for Companies to Follow?

Despite certain shareholder groups’ efforts, based upon the last years’ positive results from “responsible Investing”, there are no international requirements mandating ESG disclosure.

WOSP360 has enacted a dynamic system that enables companies that voluntarily prove their commitment to sustainability to obtain a WOSP360 certification. Also, two primary third-party SDG and ESG reporting frameworks have appeared in the marketplace. The Sustainable Accounting Standards Board (“SASB”) provides an industry-specific disclosure framework for material ESG issues.

Conclusion

“There is a great demand for a high-quality service, and the WOSP360 Impact Analytic platform delivers a solution above any expectation with its ESG and SDG Risk Assessment Protocol determining Corporate Sustainability Ranking and a WOSP360 Triple-ABC-Rating.”

A poor Sustainability Ranking and a non-compliant WOSP360 ABC-Rating can have a tremendous impact on your company – from negatively impacting your company’s stock’s fundamental analysis to excluding your company’s stock from an ESG-themed investment product, or even affecting your company’s credit rating. It is therefore critical that all companies review and monitor their WOSP ratings on an ongoing basis.

Why WOSP360 Risk Certification, Sustainability and Triple ABC-Ratings?

A low and non-proactive ESG and SDG system at the heart of any organisation, corporation or business operation put not only employees, employers and invested money at high risk. But so do the direct and indirect adverse impacts and unforeseen consequences to our society, nature, environment and stakeholders economics and financial safety.

WOSP360 is an impact-analytic proactive methodology build around the original ideas of 17 Sustainability Development Goals and the much later Environment, Safety and Governance as more easily understood, focusing on five impact areas of concern. WOSP360 integrated them holistically and added Technology and Governance as a crucial element that was not obvious 33 years ago. The WOSP360 Platform is built on Five SDG Pillars, structured with 22 SDG Sections and holds 864 SDG Factors in its interior equation and equipped with a Triple-ABC Rating office proactive sustainability assessment.

WOSP360iA is a viral and dynamic platform for corporate transformation and innovation.